Stanbic Bank Moves Early on CBK’s Revised Risk-Based Credit Pricing Guidelines
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Stanbic Bank Kenya has moved to implement the Central Bank of Kenya’s (CBK) Revised Credit Pricing Guidelines, making it the first lender to act on the regulator’s new framework. The shift introduces a new way of calculating lending rates for Kenya Shilling-denominated loans.
In a customer notice, the lender said that all new variable rate loans contracted after September 1, 2025, will adopt the revised Risk-Based Credit Pricing Model, subject to approval by its board. Existing loans will transition by February 28, 2026, in line with CBK’s six-month transition window that begins on December 1, 2025.
The new framework requires banks to use the Kenya Shilling Overnight Interbank Average (KESONIA) as the primary reference rate when pricing loans. KESONIA replaces the earlier interbank overnight rate and has been introduced to align with international standards.
Where it is not practical to apply KESONIA, lenders will instead use the Central Bank Rate (CBR) as the benchmark.
Stanbic Bank noted that its systems, agreements, and processes are being updated to support the transition.
“Once concluded, we will publish details of our loan pricing, including average rates and fees, on our website. In the meantime, your loan(s) will continue to be priced under the previous model. We will keep you informed and communicate the switchover date expediently,” the bank said.
Customers were also advised to direct queries to their relationship managers or contact the bank’s customer care.
The CBK overhauled the country’s lending framework in September 1st 2025, replacing the earlier version of the Risk-Based Credit Pricing Model introduced in 2019. According to the regulator, the earlier model failed to deliver on transparency and fair pricing.
Many banks grouped borrowers into broad categories rather than assessing individual risk profiles, often adding hidden charges such as penalty interest and processing fees. This contributed to unrealistic lending rates, weak oversight, and dissatisfaction among borrowers.
Under the revised guidelines, all banks must calculate interest rates by applying a CBK-approved margin, covering operational costs, risk, and expected returns, on top of the CBR or KESONIA.
The published rates will be disclosed publicly on the CBK website and in national newspapers, allowing customers to compare borrowing costs across lenders.
The regulator benchmarked the changes against established credit pricing systems in other countries, including the United States, United Kingdom, India, Brazil, and South Africa. In these markets, central policy rates serve as the base for lending, with well-defined premiums applied for risks and operational costs.
CBK expects the reforms to enhance predictability, align pricing with monetary policy, and ensure consistency across the banking sector.
FAQS
- What happens to fixed-rate loans under CBK’s Revised Credit Pricing Guidelines?
Fixed-rate loans are not affected. The guidelines only apply to Kenya Shilling-denominated variable rate loans. Borrowers with fixed-rate agreements will continue paying based on their original contracts.
- Will the revised Risk-Based Credit Pricing Model affect foreign currency loans?
No. The guidelines specifically cover Kenya Shilling-denominated loans. Foreign currency loans continue to be priced under separate arrangements agreed upon between lenders and borrowers.
- How often will KESONIA be updated, and where can customers find it?
KESONIA will be published daily by CBK, similar to how the Central Bank Rate is communicated. Customers can access it on the CBK website and through official financial market reports.
- Can borrowers challenge or appeal loan pricing under the new model?
Yes. Since banks must now disclose their pricing methodology and publish rates, customers can seek clarification from their lender. If disputes arise, they may escalate issues to CBK or the Banking Fraud Investigations Department.
- Will the new framework reduce borrowing costs for customers?
Not necessarily. While the framework improves transparency and consistency, borrowing costs will still depend on the base rate (KESONIA or CBR) and the bank’s approved premium. Some customers may see lower costs due to standardization, while higher-risk borrowers may still face elevated rates.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.
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